Altus Brands, LLC v. Tronicbros. & Eclat Createurs Holdings
Filing
94
OPINION granting 75 Defendant Largay's Motion to Dismiss Count VII of the Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a Claim; signed by Magistrate Judge Ellen S. Carmody (Magistrate Judge Ellen S. Carmody, jal)
UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
ALTUS BRANDS, LLC,
Plaintiff,
Hon. Ellen S. Carmody
v.
Case No. 1:17-cv-346
TRONICBROS & ECLAT CREATEURS
HOLDINGS, et al.,
Defendants.
_________________________________/
OPINION
This matter is before the Court on Defendant Largay’s Motion to Dismiss Count
VII of the Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a
Claim. (ECF No. 75). The parties have consented to proceed in this Court for all further
proceedings, including trial and an order of final judgment. 28 U.S.C. ' 636(c)(1). By Order of
Reference, the Honorable Janet T. Neff referred this case to the undersigned. For the reasons
discussed herein, Defendant’s motion is granted and Count VII of Plaintiff’s Second Amended
Complaint is dismissed.
I.
BACKGROUND
The following allegations are contained in Plaintiff’s Second Amended Complaint.
(ECF No. 66). Prior to 2012, Tronicbros & Eclat Createurs Holdings (Tronicbros) began selling
goods to Extreme Dimension Wildlife Calls, LLC (Extreme Dimension). Tronicbros did not
retain a security interest in these goods. Extreme Dimension was unable to keep current its
account with Tronicbros and accrued an unpaid balance in an unknown amount.
In June 2012, Altus Brands, LLC (Altus) entered into a purchase agreement with
Extreme Dimension pursuant to which Altus would purchase various assets, including assets which
Extreme Dimension previously acquired from Tronicbros. As part of this purchase agreement,
Extreme Dimension warranted that it possessed “good and marketable title” to the assets it was
selling to Altus “free and clear of any Liens or restriction or transfer.” Counsel for Extreme
Dimension, Christopher Largay, authored an opinion letter in which he asserted, in part, that
Extreme Dimension “has all requisite power and authority, and has taken all necessary action. . .to
release and assign ownership of its business and all the assets contemplated by the Asset Purchase
Agreement. . .” Among the assets which Altus purchased were certain “fixed assets” located in
China (the China Assets) which remain in the possession of Tronicbros which asserts ownership
thereto.
The terms of this purchase agreement did not provide for the assumption by Altus
of any of the outstanding debt that Extreme Dimension owed to Tronicbros. However, Altus and
Tronicbros separately reached an “informal agreement” whereby Tronicbros would supply goods
to Altus for sale. As part of this agreement, Tronicbros added a surcharge to any goods Altus
purchased with the surcharge amount being applied to the amount of Extreme Dimension’s
outstanding debt to Tronicbros.
This agreement did not obligate Altus to purchase from
Tronicbros any particular quantity or dollar amount of goods. At some point, the amount of goods
Altus purchased pursuant to this informal agreement declined at which point Tronicbros began to
invoice Altus for the outstanding amounts which Extreme Dimension owed Tronicbros.
Plaintiff has sued Tronicbros, Extreme Dimension, and Christopher Largay,
asserting various causes of action. Defendant Largay now moves the Court to dismiss the claims
against him on the grounds that this Court cannot properly exercise personal jurisdiction over him.
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Largay further argues that Plaintiff’s allegations against him do not state a claim on which relief
may be granted. The Court is persuaded by both of Plaintiff’s arguments.
II.
Personal Jurisdiction
Defendant Largay argues that because this Court cannot properly exercise personal
jurisdiction over him, dismissal of Plaintiff’s claim against him is appropriate. Plaintiff bears the
burden on this question. See AlixPartners, LLP v. Brewington, 836 F.3d 543, 548 (6th Cir. 2016).
Because the Court is resolving Defendant’s personal jurisdiction challenge on written submissions,
Plaintiff’s burden is “relatively slight,” but Plaintiff nevertheless must set forth “specific facts
showing that the court has jurisdiction.” Id. at 548-49. The Court must assess the parties’
pleadings and affidavits “in a light most favorable to” Plaintiff. Id. at 549.
Subject matter jurisdiction in this matter is premised upon diversity of the parties.
(ECF No. 66 at PageID.735).1 Personal jurisdiction takes two forms: general and specific. See
Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 678 (6th Cir. 2012). General jurisdiction
requires that Defendant have maintained “continuous and systematic contact with the forum state.”
Id. at 678-79. As there is no allegation that Defendant satisfies this standard, Plaintiff must
establish the twin requirements of specific jurisdiction: (1) the Michigan long-arm statute, and (2)
constitutional due process. Id. at 679. Because Michigan interprets its long-arm statute as
“extend[ing] to the limits imposed by federal constitutional due process requirements,” the analysis
merges into a single assessment of whether due process is offended by the exercise of personal
jurisdiction over Defendant. AlixPartners, 836 F.3d at 549.
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Plaintiff also brings the present action pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201. (ECF No. 66
at PageID.735). This provision, however, neither creates nor grants subject matter jurisdiction. See, e.g.,
Funderwhite v. Local 55, United Association, 702 Fed. Appx. 308, 312 (6th Cir., July 24, 2017).
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The Court assesses the personal jurisdiction question by reference to a multi-factor
test all three prongs of which must be satisfied before the Court can exercise personal jurisdiction
over Defendant: (1) purposeful availment; (2) arising from; and (3) reasonableness. Id. at 54952. Because Defendant Largay did not purposefully avail himself of Michigan, the Court need
not assess the latter two factors.
Purposeful availment represents “the constitutional touchstone of personal
jurisdiction, and it exists where the defendant’s contacts with the forum state proximately result
from actions by the defendant himself that create a substantial connection with the forum state. .
.and where the defendant’s conduct and connection with the forum are such that he should
reasonably anticipate being haled into court there.” Id. at 550 (emphasis in original). The
purposeful availment requirement “ensures that a defendant will not be haled into a jurisdiction
solely as a result of random, fortuitous, or attenuated contacts or of the unilateral activity of another
party or third person.” Air Products and Controls, Inc. v. Safetech International, Inc., 503 F.3d
544, 551 (6th Cir. 2007).
As the Sixth Circuit has recently observed, “a relationship with the plaintiff or a
third party, standing alone, is an insufficient basis for jurisdiction.” MAG IAS Holdings, Inc. v.
Schmuckle, 854 F.3d 894, 900 (6th Cir. 2017) (quoting Walden v. Fiore, - - - U.S. - - -, 134 S.Ct.
1115, 1123 (2014)). Instead, “the focus is on the defendant’s contacts with the forum State itself.”
Schmuckle, 854 F.3d at 900 (quoting Fiore, 134 S.Ct. at 1122). In this respect, while physical
presence in the forum state is not required, such is relevant to the analysis. Schmuckle, 854 F.3d
at 900 (quoting Fiore, 134 S.Ct. at 1122).
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There is no allegation that Defendant acted in Michigan in this or any other matter.
Defendant asserts that, other than “transfers between airline flights,” he has never been in Michigan
and has never conducted business in Michigan. Plaintiff does not suggest otherwise. With
respect to the specific actions giving rise to the present action, Defendant asserts that his only
involvement in this matter was to prepare the Opinion Letter referenced above. Defendant asserts
that he did not mail or transmit this letter to Michigan, but instead personally presented the letter
to representatives of Plaintiff who travelled to Maine. Plaintiff likewise does not dispute this.
Plaintiff asserts that personal jurisdiction over Defendant Largay is appropriate
because the asset purchase agreement between Altus and Extreme Dimension specifically provides
that the parties thereto agree to submit to the jurisdiction of any state or federal court sitting in
Grand Traverse County, Michigan in any action or proceeding arising out of or relating to the
purchase agreement. As Defendant correctly asserts, however, he is not a party to the purchase
agreement.
Thus, this particular provision neither applies to nor binds Defendant Largay.
Moreover, the assets in dispute giving rise to this action are located in China and there is no
allegation by Plaintiff that these assets were ever located in Michigan.
In sum, the only connection between Defendant and Michigan is the random fact
that Plaintiff resides there. However, this is insufficient to subject Defendant to the personal
jurisdiction of courts in this state. See, e.g., Calphalon Corp. v. Rowlette, 228 F.3d 718, 722-23
(6th Cir. 2000) (personal jurisdiction inappropriate over defendant who undertook no action to
reach out to or associate with Michigan, but instead had contact with Michigan “only because the
plaintiff chose to reside there”); Air Products, 503 F.3d at 551 (personal jurisdiction over a
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defendant not appropriate where the defendant’s contacts with the forum state are the result of
“random, fortuitous, or attenuated contacts or of the unilateral activity of another party or third
person”). Accordingly, the Court concludes that it cannot exercise personal jurisdiction over
Defendant Largay in this matter.
III.
Failure to State a Claim
Defendant Largay argues, in the alternative, that even if personal jurisdiction is
appropriate in this matter, the claim against him must nevertheless be dismissed because Plaintiff’s
allegations fail to state a claim on which relief may be granted. The Court agrees.
A Rule 12(b)(6) motion to dismiss for failure to state a claim on which relief may
be granted tests the legal sufficiency of a complaint by evaluating the assertions therein in a light
most favorable to Plaintiff to determine whether such states a valid claim for relief. See In re NM
Holdings Co., LLC, 622 F.3d 613, 618 (6th Cir. 2000). Pursuant to Federal Rule of Civil
Procedure 12(b)(6), a claim must be dismissed for failure to state a claim on which relief may be
granted unless the “[f]actual allegations [are] enough to raise a right for relief above the speculative
level on the assumption that all of the complaint’s allegations are true.” Bell Atlantic Corp. v.
Twombly, 550 U.S. 544, 545 (2007).
As the Supreme Court more recently held, to survive a motion to dismiss, a
complaint must contain “sufficient factual matter, accepted as true, to ‘state a claim to relief that
is plausible on its face.’” Ashcroft v. Iqbal, 556 U.S. 662, 677-78 (2009). This plausibility
standard “is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility
that a defendant has acted unlawfully.” If the complaint simply pleads facts that are “merely
consistent with” a defendant’s liability, it “stops short of the line between possibility and
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plausibility of ‘entitlement to relief.’” Id. As the Court further observed:
Two working principles underlie our decision in Twombly. First, the
tenet that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions. Threadbare
recitals of the elements of a cause of action, supported by mere
conclusory statements, do not suffice. . .Rule 8 marks a notable and
generous departure from the hyper-technical, code-pleading regime
of a prior era, but it does not unlock the doors of discovery for a
plaintiff armed with nothing more than conclusions. Second, only
a complaint that states a plausible claim for relief survives a motion
to dismiss. . .Determining whether a complaint states a plausible
claim for relief will, as the Court of Appeals observed, be a contextspecific task that requires the reviewing court to draw on its judicial
experience and common sense. But where the wellpleaded facts do
not permit the court to infer more than the mere possibility of
misconduct, the complaint has alleged - but it has not “show[n]” “that the pleader is entitled to relief.”
Id. at 678-79 (internal citations omitted).
Count VII of Plaintiff’s Second Amended Complaint asserts that Defendant Largay
committed the tort of Breach of Promises of Opinion Letter. (ECF No. 66 at PageID.751).
Defendant argues that there exists no such cause of action under Michigan law. Plaintiff has not
identified any authority holding or even suggesting that such a cause of action exists under
Michigan law. Instead, Plaintiff responds that its “claims encompass causes of action that include
breach of contract/warranty, negligence, misrepresentation, and legal malpractice.” The Court
has no opinion whether the facts alleged by Plaintiff would state a claim for a cause of action which
has not been alleged. Plaintiff has twice amended its complaint and could have asserted some
other cause of action had it desired to do so. Instead, Plaintiff has chosen to assert a claim for
Breach of Promises of Opinion Letter. Plaintiff has failed to allege facts which would permit it
to prevail on such a claim. Accordingly, Defendant’s motion to dismiss is, in the alternative,
granted.
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CONCLUSION
For the reasons articulated herein, Defendant Largay’s Motion to Dismiss Count
VII of the Second Amended Complaint for Lack of Personal Jurisdiction and Failure to State a
Claim, (ECF No. 75), is granted and Count VII of Plaintiff’s Second Amended Complaint is
dismissed. An Order consistent with this Opinion will enter.
Dated: July 3, 2018
/s/ Ellen S. Carmody
ELLEN S. CARMODY
U.S. Magistrate Judge
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